I focus on the strategic, economic and business implications of defense spending as the Chief Operating Officer of the non-profit Lexington Institute and Chief Executive Officer of Source Associates. Prior to holding my present positions, I was Deputy Director of the Security Studies Program at Georgetown University and taught graduate-level courses in strategy, technology and media affairs at Georgetown. I have also taught at Harvard University's Kennedy School of Government. I hold doctoral and masters degrees in government from Georgetown University and a bachelor of science degree in political science from Northeastern University. Disclosure: The Lexington Institute receives funding from many of the nation’s leading defense contractors, including Boeing, Lockheed Martin, Raytheon and United Technologies.

Boeing Helicopter Complex Thrives Amidst Industrial Decay

Forward-deployed soldiers of the Army's 101st Airborne Division await airlift by Chinook helicopters in Afghanistan. The continuously improved Chinook made at Boeing's rotorcraft complex in Pennsylvania has been supporting U.S. forces since the Vietnam War, moving troops, delivering supplies, evacuating wounded and even conducting parachute drops. (Photo credit: Wikipedia)

The west bank of the Delaware River south of Philadelphia is a case study in America’s industrial decline. Hundreds of factories, shipyards and chemical plants have closed since World War Two ended, producing a landscape of ruin and despair.

But sitting in the midst of this desolation, not far from where William Penn first stepped ashore in the New World in 1682, is a beacon of economic strength and stability — the sprawling BoeingBoeing rotorcraft complex in Ridley Township. Boeing is one of the few big manufacturers that has not deserted the Delaware Valley. In fact, it has made the Ridley Township complex headquarters for its entire rotorcraft business, stationing most of the key executives and 6,000 other employees there.

You can see the complex if you ride the train or drive I-95 between Washington and New York. At first glance it looks like an oasis of spartan modernity with its vast expanse of beige and gray buildings. But if you know the history of the place then you realize it is a lot more. It is the corporate descendant of the company aviation pioneer Frank Piasecki founded in 1940, which flew the world’s first tandem-rotor helicopter in 1945. The complex still specializes in making dual-rotor aircraft today, leaving single-rotor airframes to its other big manufacturing center in Mesa, Arizona.

Long before Frank Piasecki brought his dream to fruition, though, the most imposing structure at the Pennsylvania complex was something else entirely: the home of Baldwin Locomotive, the world’s biggest maker of steam-driven locomotives. Boeing assembles Chinook helicopters for the U.S. Army and 20 other militaries around the world in a huge factory that Baldwin erected in 1929 to manufacture railcars. Baldwin faltered in the transition from steam to diesel and disappeared, but the building lives on, repurposed for a new generation of workers.

Not that you’d know that today unless somebody told you. In Baldwin’s days, the factory had dirt floors and dim lighting. Today, the painted cement floors are cleaner than those in most kitchens — any form of debris is forbidden — and the plant is so brightly lit by natural light and energy-efficient fixtures that you could read this commentary in six-point Helvetica anywhere in the building. Boeing is spending $130 million modernizing the Chinook plant and $40 million at other parts of the site — its second biggest domestic facilities investment after the new Dreamliner plant in South Carolina.

Boeing hasn’t just invested in the building, it has spent years refining what it calls “lean enterprise” processes aimed at driving affordability into every facet of operations. Both on the Chinook line and in the factory across the street when fuselages for the revolutionary V-22 Osprey tiltrotor are assembled using lightweight composites and robots, Boeing has evolved lessons it learned from Japanese carmakers to implement practices that seem almost surgical in their precision. In the process, it has nearly eliminated worker accidents while managing to reuse every item of waste the plant generates — meaning it adds nothing to local landfills.

This certainly isn’t the way Baldwin Locomotive and all the other departed antecedents of what is now called Boeing Vertical Lift used to operate. For them, mounds of waste were an inevitable by-product of industrial progress, and smoke billowing from stacks a welcome sign of men at work. Today, no smoke at all issues forth from Boeing’s Ridley Township complex. In fact, you have to leave the site just to light up a cigarette.

The proud overseer of this pristine plant is Boeing Vertical Lift’s General Manager Leanne Caret, whose enthusiasm for her products and workers is downright infectious. She escorted me on a tour of the site Thursday, and although various executives were charged with explaining parts of the operation to me, she couldn’t resist interjecting details at each stop drawn from her seemingly encyclopedic knowledge of the plant and the business. Boeing gives money to my think tank and I have taken advantage of that fact to visit most of the company’s major manufacturing sites, but even in an enterprise where pride is pervasive, Caret seems unusually attached to the business she runs.

Rotorcraft are only one facet of Boeing’s defense business, which builds everything from Navy fighter jets and Air Force tankers to Army networks and secret satellites for the intelligence community. So even though Boeing Vertical Lift generates billions of dollars in revenues, it sometimes gets overlooked by analysts who are typically more focused on the company’s commercial jetliner unit. But that hasn’t stopped Boeing chairman James McNerney from publicly singling out the company’s rotorcraft programs for praise, because Caret’s unit is performing so well in a softening military market (not to mention a zip code where industrial success is rare).

Not only are Boeing Vertical Lift’s products in high demand at home, but Caret’s team has big plans for selling more of them overseas — including the unique V-22 Osprey tiltrotor that combines the vertical agility of a helicopter with the speed and range of an airplane. Over the last dozen years, Boeing and partner Bell-TextronTextron have transformed the Osprey from a chronically troubled program into the safest rotorcraft in the Marine Corps inventory, and now they seem to have landed their first foreign customer in Israel. They hope to find many more such overseas customers given the aircraft’s versatility, which far exceeds that of traditional rotorcraft.

Foreign sales bulk large in Caret’s future plans for her unit, because domestic demand for Vertical Lift’s main products may begin winding down toward the end of the decade. Recently awarded multi-year contracts for the Army Chinook and Marine Osprey will largely complete the fleet objectives those two services have for the airframes, and upgrades being performed on the Army’s ApacheApache attack helicopters in Mesa are subject to similar constraints beyond 2020 (the Mesa site employs nearly 5,000 workers).

Other opportunities may emerge from the Pentagon in the meantime, including a new Army reconnaissance helicopter for which Boeing is offering its low-cost AH-6 Little Bird favored by special-operations forces, and a next-generation “joint multi-role tech demonstrator” on which Boeing is teaming with United TechnologiesUnited Technologies rotorcraft powerhouse Sikorsky. But compared with the last decade, the domestic demand for military rotorcraft in the next decade could be quite weak, so Boeing Vertical Lift has launched dozens of marketing campaigns in Asia, Europe, Africa and Latin America aimed at expanding its global footprint. Vertical Lift already is setting the pace for increasing overseas sales within Boeing’s defense business, but it has to if it wants to maintain current levels of profitability and employment.

General Manager Caret says that aside from continuing to sustain the superior quality and performance of her unit’s products, two factors will be crucial to the success of global marketing efforts. First, Boeing Vertical Lift must continue to enjoy a robust partnership with the U.S. government, which often plays a make-or-break role in foreign arms sales. Second, it must utilize the international resources of the whole Boeing organization, including the commercial aircraft business, to assure that the rotorcraft unit has a continuing presence on the ground in countries where it is trying to sell its products. Caret says tapping into the global presence and skills of the whole enterprise is part and parcel of Chairman McNerney’s “One Boeing” initiative.

So here is what the future holds for the biggest manufacturing complex that still calls the lower Delaware Valley home. Boeing Vertical Lift must successfully execute multi-year production contracts for its domestic military customers while expanding its overseas markets in anticipation of the day when Pentagon demand wanes. If it succeeds, then Boeing will continue to provide thousands of high-paying jobs in a place that most such jobs have long since fled. If it fails, then the Pennsylvania complex will become the latest installment in a long-running chronicle of local decline. Caret and her management team view winning this war in very personal terms, because they know what it will mean for their company and community if they don’t.

Post Your Comment

Post Your Reply

Forbes writers have the ability to call out member comments they find particularly interesting. Called-out comments are highlighted across the Forbes network. You'll be notified if your comment is called out.